Copper Seen Falling as Monti’s Warning Adds to Growth Concerns

Aug. 6 (Bloomberg) -- Copper may fall in London, extending last week’s drop, as a warning by Italian Prime Minister Mario Monti that policy disagreements are undermining the European Union added to concerns about the region’s economic growth.

European stocks dropped and the euro erased gains after Monti told Germany’s Der Spiegel magazine that tensions within the 17-nation shared currency area are “showing signs of a psychological dissolution of Europe.” Copper retreated after rallying the most in three weeks on Aug. 3 as U.S. payrolls climbed more than forecast in July.

Monti’s comments “probably sent a bit of a reality check back into the market and the euro has weakened a bit this morning as a consequence,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said by e-mail today. “Short-term copper is under a bit of pressure this a.m. as the dollar is rising and demand remains low.”

Copper for three-month delivery was little changed at $7,441 a metric ton by 10:07 a.m. on the London Metal Exchange, after dropping as much as 0.8 percent earlier today. The metal declined 1.6 percent last week as the European Central Bank and the Federal Reserve refrained from announcing further stimulus. Copper for September delivery was little changed at $3.368 a pound on the Comex in New York.

The euro slid as much as 0.4 percent to $1.2342. A stronger dollar saps demand for commodities as an alternative investment and makes metals priced in greenbacks more expensive in terms of users of other currencies.

Money managers cut their net short positions to 6,664 futures and options on the Comex in the week ended July 31, according to U.S. Commodity Futures Trading Commission.